Chinese and US trade war threatens to drag on

Chinese and US negotiators are meeting this week for their final trade talks before US President Donald Trump decides whether to escalate a dispute over technology with a March 2 tariff hike on $200 billion of imports from China.

The two days of talks starting today allow too little time to resolve the war over Beijing’s technology ambitions that threatens to drag on, weakening global economic growth, business people and economists say. They believe China’s goal is to make enough progress to persuade Trump to extend his deadline.

There are few signs of movement on their thorniest issue: Washington’s demand that Beijing scale back plans for the government-led creation of global champions in robotics and other technology.

China’s trading partners say those violate its market-opening obligations and some in the US worry they might erode US industrial leadership.

This week, Beijing wants “to see the threat of additional tariff imposition being removed for as long as possible,” with minimal conditions attached, said Louis Kuijs of Oxford Economics.

Trump’s December agreement to postpone more tariff hikes while the two sides negotiate expires on March 1. The following day, a 10% tariff imposed in July on $200bn of Chinese imports would rise to 25%.

Companies on both sides have been battered by Washington’s tariffs and retaliatory duties imposed by Beijing. The stakes are rising as global economic growth cools.

Trump hiked tariffs in July over complaints Beijing steals or pressures companies to hand over technology.

Chinese leaders have offered to narrow their multibillion-dollar trade surplus with the US, but they have baulked at making major changes in development plans they see as a path to prosperity and more global influence. “China will continue resisting US demands in certain areas, such as changes to its industrial strategy and the role of the state in its economy,” said Eswar Prasad, a Cornell University economist who was head of the China division at the International Monetary Fund.

Chinese officials reject complaints that foreign companies are required to hand over technology, but business groups and foreign governments point to rules they say compel companies to share technology with state-owned local partners or disclose trade secrets.

Chinese officials are also baulking at US pressure to accept a mechanism to monitor whether Beijing carries out its promises, said Kuijs.

The US delegation is led by Trade Representative Robert Lighthizer. He is accompanied by Treasury Secretary Steven Mnuchin. The Chinese side is led by Vice Premier Liu He, President Xi Jinping’s top economic adviser.

Even if negotiators produce an agreement, this might run into opposition from within the Trump administration.

“The hardliners seem loath to settle for a deal that represents anything less than total capitulation by China on all US demands,” said Prasad.

Negotiators have said any final agreement will have to be made by Trump and Xi. Trump said last week that they planned to meet, but not before the March 1 deadline.

And what if Trump goes ahead with a March 2 tariff hike to step up pressure on Beijing?

“We certainly hope not,” said Jeremie Waterman, president of the US Chamber of Commerce’s China Centre and a former US trade official. “It would be a terrible cost for American consumers and a terrible hit to the global economy.” AP African News Agency (ANA)